The economics of imprisonment and offender supervision in Queensland: Costs and efficiency in the provision of corrective services

Edwards, Glyn Francis (1999). The economics of imprisonment and offender supervision in Queensland: Costs and efficiency in the provision of corrective servicesPhD Thesis, School of Economics, The University of Queensland.

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Issues of law, order and imprisonment are no less important in Queensland than they are elsewhere in the world. This study focuses on one area of law and order expenditure, that of imprisonment. The function of imprisonment is not merely to deter crime but also to punish offenders and to attempt to rehabilitate them before releasing them into the community. To an economist the obvious question that this raises is whether the benefits of imprisonment outweigh the costs. Crime is very much a cost and allocation issue. The most obvious costs are those of policing, bringing to trial and incarcerating offenders. There are also the indirect costs to the victims of crime as well as the costs imposed on the families of offenders and to society in the form of welfare support, not to mention the loss of productivity for an offender while in prison. Society must decide how best to allocate its scarce resources in order to obtain the maximum benefit.

While the issues in this thesis are examined in the context of the Queensland experience it is not unique to this part of Australia or to this part of the world. The problems raised and the recommendations made can easily be applied to other jurisdictions.

The study begins by examining the economic approach to crime and compares this to sociological and psychological theories. The focus is on the causes of criminal behaviour and its prevention. Crime is seen as a rational act which can be reduced by increasing the costs, those being the probability of apprehension and the severity of the punishment. Economic theories seek to define an optimal level of crime, which implies an optimal level of public resource allocation.

The history of imprisonment shows how the functions of today's prisons have changed over time. While initially performing the function of restraint they begin to assume the role of punisher and more recently as rehabilitator. Interestingly, the early prisons were operated on a user- pays system, that is, the prisoner was expected to pay for board and lodging. Although the practice may not be feasible in today's society the privatisation of prisons might be considered a variation of this, to the extent that the prisons are managed by profit motivated private concerns.

The prisons of Australia have been largely modelled on those of Britain and Europe and prison administration in Queensland has its roots in these penal systems. The difference is, however, that Australia's convict origins has made some mark on the nature of corrections in this state. The study therefore looks at the development of corrective services in Queensland from its convict beginnings.

No account of prison administration in Queensland would be complete without an examination of the Kennedy Enquiry. The thesis looks in detail at the recommendations made resulting from the Commission of Review as well discussing the reasons for this. Whether or not the Queensland Corrective Services Commission has been successful in implementing the recommendations forms an important topic for debate.

At a time when governments the word over are searching for ways to reduce expenditure privatisation has assumed an important role. Corrective services are no exception to this. In Australia as elsewhere the private sector is being encouraged to participate in the running of prisons. The rationale is not necessarily that the private sector is more efficient than the public sector but rather that increased competition will produce efficiency gains and therefore reduce public sector expenditures. In Queensland this movement is gathering momentum with two prisons contracted out to the private sector and the remainder now being within a government owned corporate entity. The question arises as to the moral issues involved and also the extent of the potential efficiency gains and therefore cost reductions. This forms the basis for a comparison between a government managed prison and a privatised prison in similar parts of Queensland and having similar security status. On a cost/inmate basis little difference emerges.

Since the study is based on Queensland prisons it is necessary to understand the nature of the state's penal institutions and the inmates. Data show that prison inmates the world over share many common characteristics and Queensland's prison population is no exception. By and large offenders are young males with education levels below the state average and come from the low income areas with high levels of unemployment. In Queensland a hugely disproportionate number of inmates consist of Aboriginals. In other words the state's prison population is in no way representative of the state's population.

The issue of the cost of imprisonment is central to this study. Disaggregated recurrent expenditure figures provide the basis for a comparison between institutional costs and areas of expenditure. Costs vary not only between institutions with similar security status but also between areas of expenditure illustrating the scope for rationalisation. High cost institutions are, in the main, high security prisons while the cheapest on a unit cost basis are open custody prisons. There is some evidence also that the opportunity for scale economies exists within the prison system and that the general trend in average costs is downwards.

Apart from reducing total costs by achieving efficiency gains and a reduction in unit costs the level of expenditure would undoubtedly fall if the prison population fell. This, of course, requires consideration of alternative forms of punishment and supervision. Community supervision is one such alternative and this study shows a relatively low re-offence rate for offenders on parole. It can also be provided in Queensland at a fraction of the cost of imprisonment and therefore warrants serious consideration. However, not all inmates would be considered suitable for parole supervision or at least some would be considered high risk. The key to reducing the rate of re-offence is to identify those offenders who are most likely to re-offend. Using a number of explanatory variables from data provided by the QCSC multiple regression analysis is used to identify this group. This reveals a number of factors which strongly mitigate against post-release success. These include such factors as age, Aboriginality, institutional infractions, family background and employment status. Given that it is possible to recognise high risk offenders it follows that special programmes can be offered to aid parole success or at least extend the offence free period subsequent to release. This undoubtedly provides the opportunity for very substantial public sector expenditure savings.

Finally, it is not merely the released inmates who differ in their ability to successfully remain outside prison but there are also differences in the quality of preparation for release or supervision on release. This may of course reflect differences in the nature of the offenders but may also reflect variations in resource allocations. Cost-efficiencies are measured and compared using the average number of offence free days per institution or community supervision region. This opens the door for a more thorough investigation of the poor performers, which is however, beyond the scope of this study. It is possible though that this is a question of resource switching between the various forms of institutional and community supervision.

In summary, the study provides a detailed background to corrective services in Queensland, its past and present. As far as its future is concerned the thesis makes recommendations, based on empirical observations, in relation to how cost-efficiency could be improved.

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